Save Homework: chapter 7 HW Score: 0.58 of 30 pts xE7-29 (similar to) 6 of 6 (5

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Save Homework: chapter 7 HW Score: 0.58 of 30 pts xE7-29 (similar to) 6 of 6 (5 complete) v HW Score: 37.27%, 52.17 of 140 pts IS Question Help The Schuyler Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor. EE (Click the icon to view the standards.) The number of finished units budgeted for January 2017 was 9,760, 9,750 units were actually produced. Ez (Click the icon to view actual data.) Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchased amounted to 97.600 lb., at a total cost of $497,760. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage. Read the requirements. Requirement 1. Compute the January 2017 price and efficiency variances of direct materials and direct manufacturing labor. Let's begin by calculating the actual input at the budgeted price. (Round your answers to the nearest whole dollar.) Direct materials (purchases) Direct materials (usage) Direct manufacturing labor Actual input 97,600 95,500 4,700 X Budgeted price X $ 4.90 x $ 4.90 X $ 30.00 = = $ . $ - $ Cost 478,240 467,950 141,000 Next determine the formula and calculate the costs for the flexible budget. | = Flexible budget cost Direct materials Direct manufacturing labor Choose from any list or enter any number in the input fields and then click Check Answer. 6 parts O remaining Clear All Check Answer

Explanation / Answer

FORMULA AND CALCULATION OF COSTS FOR FLEXIBLE BUDGET: Standard Input Budgeted Price Flexible Budget Cost Direct materials 97500 $             4.90 477750 Direct manufacturing labor 4875 $          30.00 146250 1) Direct material price variance= Actual Cost of materials purchased-Standard cost of actual quantity purchased = 497760-478240 = 19520 Unfavorable Direct material quantity (efficiency) variance = Standard cost of actualy quantity used-Flexible budget direct material cost = 467950-477750 = 9800 Favorable Direct manufacturing labor price or rate variance = Actual labor cost-Budgeted cost of actual hours = 148050-141000 = 7050 Unfavorable Direct manufacturing labor efficiency variance = Actual hours at budgeted price-Flexible budget direct manufacruring labor cost = 141000-146250 = 5250 Favorable 2) Direct material inventory 478240 Direct material price variance 19520 Accounts payable 497760 (To record purchases of direct materials and price variance) Work in process inventory 477750 Direct materials efficiency variance 9800 Direct materials inventory 467950 (To record issue of direct materials for production and efficiency variance) Direct manufacturing labor cost 141000 Direct manufacturing labor price variance 7050 Wages payable 148050 (To record incurring of of direct mfg labor cost and price variance) Work in process inventory 146250 Direct mfg labor efficiency variance 5250 Direct manufacturing labor cost 141000 (To record direct mfg labor cost and efficiency variance) 3) Direct Materials: The materials have been bought at a higher unit price resulting in the unfavorable variance. However, the material usage has been efficient resulting in a favorble variance. The net direct material cost variance = 9800-7050 = 2750 Unfavorable Direct manufacturing labor cost: The rate variance is unfavorable indicating that the rate of pay has been higher than the standard. But, the efficiency variance is positive. The net result is a manufacturing labor cost variance of 7050-5250 = 1800 Unfavorable 4) Variances have to be reported at the point of occurrence. Hence, direct material price variance is reported at the point of purchase for the actual quantity purchased and the usage or efficiency variance is calculated at the point of usage with quantity used.

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